Related Articles

In December, Standard & Poor's became the last of the three main ratings agencies to put Britain's top rating on a "negative outlook". It said its decision reflected the weak recovery and sharply rising national debt.

Citi predicted that the Bank of England would leave interest rates at 0.5pc until mid-2017 – a year longer than expected.

Michael Saunders, chief UK economist at Citi, said in a research note: “The economy is likely to disappoint again in 2013, with little or no growth, sticky inflation and persistent deficits on both the current account and fiscal balance."

Ray Boulger, senior technical manager at John Charcol, said that Citi's interest rate forecast was "plausible".

"Even if [the rate] is not 0.5pc in 2017, it's not likely to be much higher," he said. "The state of the economy is such that even when it does go up, it will go up slowly.

"The market does expect the bank rate to stay low and that is reflected in the much lower morgage rates that we've seen in the past few months."